Credit card fraud is a prevalent problem for consumers, merchants and credit card issuers/processors throughout the world. When a credit card or other types of charge card is stolen, or otherwise falsified, most card issuers will refund some or all of the charges applied to the card holders for purchases they did not make. Such a refund may be at the expense of the merchant, especially if the merchant did not verify a physical photo identification of the purchaser when the purchase was made. Verifying a physical photo identification at the point-of-sale (POS) requires a merchant's employee to manually study the facial features of the purchaser in front of him/her to compare to those of the person photographed in the physical photo identification. Even with the implementation of such measures, credit card fraud continues to be a problem.
Near Field Communication (NFC) is a set of short-range wireless technologies, typically requiring a short distance (e.g., 4 cm or less) for communicating between NFC devices. Instead of using a credit card, an NFC device may be used to make a payment in physical point of sale locations. A consumer may initiate the payment by holding a special mobile phone (e.g., equipped with a smartcard and an NFC module) near an NFC reader installed in a POS terminal, such as a checkout counter or a vending machine AN NFC based transaction may or may not require authentication before the transaction is completed. The payment may then be deducted from a pre-paid account or charged to a credit card account directly where such account is identified based on account information stored on the mobile phone (e.g., in the built-in smart card). As NFC payment technology becomes a more prevalent payment method, credit card fraud expands to include theft and falsification of NFC capable mobile phones as another means of identity theft.